Sensitivity of Performance Scores in Business Simulations

Abstract

"Administrators of business games are often faced with the problem of evaluating or rank ordering the performance of participating firms. One procedure for accomplishing this is to obtain a composite index of weighted rank orderings of performance factors such as earnings per share, unit Cost of production, and debt ratios. There is no general agreement, however, on what weights should be assigned to the various factors. The primary purpose of this paper is to determine how much of a difference the choice of weights actually makes. In other words, how sensitive is a set of rank orderings to a change in the weights placed on each performance factor. In this research, seven sets of weights were used to determine rank orderings of performance of teams in a business simulation in an MBA class. Rank order correlation analysis was used to test for the statistical significance of the relationships among the seven rank orderings. The findings indicate that the scores are not highly sensitive to the weighting system chosen. The underlying reasons for these correlations are explored. "